CFPB overhaul continues: Looking back at an eventful week

Mick Mulvaney’s unapologetic memo to staff about the Consumer Financial Protection Bureau’s mission headlined a spate of developments this past week as he continues to transform the agency. Here are the key developments.

Judge rejects relief in CashCall case

The week started with news of another court defeat for supporters of the Richard Cordray-led CFPB. In November, a U.S. District Court judge had sided with the bureau against CashCall, finding that the California-based nonbank lender had tried to avoid usury caps by claiming affiliation with a sovereign Native American tribe. But the same judge, in a ruling Friday, rejected the agency’s request for over $280 million in penalties, saying the lender’s violations justified a $10.2 million fine and zero in relief for consumers.

Mulvaney: No more ‘pushing the envelope’

The biggest story was acting CFPB Director Mick Mulvaney’s highly unusual memo to staff — released Tuesday — in which he slammed the leadership of former Director Richard Cordray and laid out a new governing philosophy, equating interests of consumers with those of companies and prioritizing clear rules over aggressive enforcement. Mulvaney said before his arrival the bureau was guilty of overreaching in targeting companies. "Simply put, the days of aggressively 'pushing the envelope' of the law in the name of the 'mission' are over," Mulvaney said. Industry representatives applauded the new mission statement, while backers of prior CFPB leadership were outraged.

CFPB drops probe into lender that donated to Mulvaney

On the same day Mulvaney’s memo was released, news also broke about the CFPB dropping its investigation of World Acceptance Corp., an installment lender based in Greenville, S.C., which had donated $4,500 to Mulvaney when he was a lawmaker. The CFPB had issued a civil investigative demand against World Acceptance after ProPublica reported that the company tried convincing consumers to become repeat borrowers. But according to a press release by the company, "The CFPB noted it does not intend to recommend enforcement action."

Appeals court expedites Leandra English challenge

Also on Tuesday, Leandra English, the former Cordray lieutenant who is trying to unseat Mulvaney, won a small victory when a federal appeals court said it would expedite her challenge of a lower court decision. Last month, District Court Judge Timothy J. Kelly denied English's temporary restraining order against Mulvaney, thereby validating him as the legal interim head of the agency.

More Democratic backlash over Mulvaney

As Mulvaney wins accolades from the industry, Democrats such as Cordray and Sen. Elizabeth Warren of Massachusetts have not been shy in expressing their outrage. In response to Mulvaney’s memo, Warren cited the agency’s dropping of the World Acceptance probe, saying, “It’s fitting that on the same day that Mr. Mulvaney dropped an investigation into one of his campaign donors, he admits what his actions have already demonstrated: that under his leadership the CFPB will no longer be a tough watchdog for consumers.”

CFPB’s broad review begins with focus on civil investigations

Mulvaney’s memo was just one example of how the acting director is attempting to reorient the industry. After an earlier announcement that the bureau would launch a public review of all CFPB processes, on Wednesday the agency announced the first phase: seeking comment on how it investigates firms facing possible enforcement actions. "Responding to a [civil investigative demand] can impose burdens on the recipients," the agency said.

Changes finalized to CFPB prepaid rule

In another move praised by the industry, the CFPB finalized revisions to its prepaid card rule, including extending the compliance deadline to April 2019, adjusting requirements for how errors on unregistered accounts are resolved and providing a limited exception for credit card accounts linked with digital wallets.